Auto Makers Hoping New Delhi Show Will Jump-Start Indian Market
None of the car companies are looking to the Expo for a sales boost. But they are trying to reach out to potential customers across the country with fresh plans and new strategies.
MUMBAI – India’s auto makers look to next month’s Auto Expo 2012 to be a game-changer after months of stagnant or falling sales.
With 60 high-profile model launches new to India slated for the 5-day event in New Delhi, they expect 2 million visitors to scrutinize their new products and see and examine the more than 1,000 models on display over 1.35 million sq.-ft. (125,000 sq.-m) of floor space.
None of the car companies are looking to the Expo for a sales boost. But they are trying to reach out to potential customers across the country with fresh plans and new strategies.
The once-dominant Maruti Suzuki, its market share reduced to one-third, is diversifying into cross/utility vehicles and multipurpose vehicles in a big way. A 5-seat concept CUV built on a revamped R-111 platform will go beyond the aging Gypsy and Grand Vitara.
The auto maker will display the new MR Wagon and Palette for consumer feedback and design inputs. While small, they have more space and features, sophisticated technologies and better fuel efficiency than rival Tata’s Nano.
Priced at Rs500,000-Rs600,000 ($9,260-$11,110) after local tax incentives, the MR Wagon and Palette deliver fuel economy of 71.3 mpg (3.3 L/100 km) compared with the Nano’s 58.8 mpg (4.0 L/100 km).
The auto maker’s goal is to regain lost small-car share and eventually command half the market, as it did a decade ago. It is focusing on Maruti’s affordability and Suzuki’s durability. Suzuki, meanwhile, is looking for another joint venture to develop new small-car engines.
Three German luxury auto makers are planning launches: Audi with its S6 sedan and Q3 small CUV; BMW's M5 Series high-performance sedans; and Mercedes-Benz’s GLK compact SUV.
With India’s luxury market still competitive, Tata-owned Jaguar Land Rover– enjoying stunning sales in China – will counter with the new Jaguar LR sedan range, Land Rover DC100 Defender concept and an SUV.
Premium small cars to be displayed at the expo include BMW’s entire Mini range, comprising its popular Cooper, Countryman, Clubdoor and Cabrio variants. The starting price is Rs2.5 million ($46,300) and the top-end Clubman is likely to cost about Rs3 million ($58,000).
The Mini’s competitors, including the Volkswagen Beetle and Fiat 500, have not found many takers in India. VW has managed to sell just 620 Beetles and there have been only 100 deliveries of the Fiat 500. But BMW President Andreas Schaaf says the Indian market is changing.
"We are selling close to 20,000 luxury cars annually, and now the customers are willing to spend money on smaller-framed brands,” he says. “Mini perfectly fits into the definition, and India is now a mature market for premium luxury small cars."
VW has scaled down its Up! minicar for emerging markets, and its budget variant will launch soon.Says Neeraj Garg, group sales director-Volkswagen India: “Though overall market sentiments continue to be low, our growth chart still continues. Our entire range of car lines has performed well during the month.”
Is a revival of India’s car market around the corner? Some questions remain unanswered:
With the Indian rupee depreciating 20% against the dollar in the past year, auto makers are putting investments on hold and slashing costs to survive intensifying competition. Global companies are boosting local sourcing of components and materials as high as 90%.
As gasoline prices have risen 22% in the past 18 months, there is growing demand for diesel vehicles and long waiting lists for them. But the Indian government keeps threatening to raise taxes on diesel vehicles to bridge the gap between the operating costs of the two fuels.
Additionally, Toyota Kirloskar and Honda Siel still are struggling to re-establish supply lines disrupted by natural disasters in Japan and Thailand. Plus, union recognition and policies on employee termination could saddle Hyundai with labor trouble of the sort that shut down Maruti Suzuki production for part of the summer.
India also is becoming increasingly isolated from the 10-member Association of Southeast Asian Nations as auto makers focus on fast-growing markets in Indonesia, Malaysia and Vietnam. ASEAN countries have a free trade agreement among them and a coordinated list of imports and exports. India’s only FTA is with Thailand.
One thing is sure: The Indian car market is unpredictable. One month there is an 8-month waiting list for the Toyota Etios, and the next month the waiting list disappears. Maruti Swift Dzire buyers face a 10-month wait.
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